This palace was initially erected in 1266 by the capitano del popolo Raniero Gatti.
It was a larger complex of buildings, extending westward behind the former church of Santi Giuseppe e Teresa and the former convent of the Discalced Carmelite nuns that still occupies the block between Via La Fontaine and Via degli Scalzi (and the Piazza of the Fontana Grande).
As was typical of the houses of noble families in this era, the Gatti Palace included defensive towers, six in number, that no longer exist.
The palace is said to have hosted a number of visiting lords, including in 1328 Louis IV, Holy Roman Emperor (Ludovico il Bavaro); in 1452 Frederick III, Holy Roman Emperor on his way to Rome to be crowned by Pope Nicholas V and to receive his bride to be, the young Portuguese princess Lionora; and also in 1474, Federico da Montefeltro, Duke of Urbino.
A wide stone staircase, in the alleway leading north, from Via La Fontaine, rises up to the piano nobile.